Focus on diversification of economy, promotion of manufacturing and services sector and demand from services related to rising number of industrial unit led the growth in demand for office space in Riyadh.
Saudi Arabia is a key oil exporting country in the world and in the past few years has witnessed significant rise in other form of industries and services including energy, education banking and other service. This diversification of economy has created a significant rise in demand for office spaces across the country and especially in the capital city of Riyadh. Private players are the key participants in the rental office real estate market with small contribution coming from government agencies. During the period 2013-2016 office real estate market has registered constant increase in demand and supply with supply exceeding the demand all the time. Rentals have remained nearly constant for most of the period and were dependent on type and area of the office. Demand was maximum in the central business district which occupies the major portion of the office space supply in the the city of Riyadh.
Rising share of private participation in the economy, entry of large number of foreign companies and positive developments in services and manufacturing sector along with growing participation of Saudi and women workforce promoted the demand for office space which is expected to continue in future. Demand for office space in Riyadh may face stiff competition from office space development in Jeddah and other cities. Government support will continue to play a key in creating new jobs and diversification of economy from oil and gas creating additional demand for office space in the city.
The report titled “Riyadh Office Real Estate Market by Major Projects (Elegance Tower, Al Saedan Towers, Tijan Plaza, Hamad Tower, Tatweer Tower) -Outlook to 2021” by Ken Research suggested that a Total occupied office space increased from 1.9 million square meters in 2013 to approximately 2.2 million square meters during 2016, achieving a CAGR of 4.4% during the same period. In 2016, the supply demand gap continues to exist even though the delay was observed in delivery of mammoth office spaces in KAFD
Ankur Gupta, Head Marketing & Communications